PRESS RELEASE – FOR IMMEDIATE RELEASE
Excellent Results for Meriden’s Second Bond Refinancing
MERIDEN– City officials in Meriden have announced exceptional results from refunding bonds that closed on Friday, December 18, 2020. The $15.825 million refunding bond issue yielded significant savings as a result of refinancing bonds originally issued at higher rates. This signifies the second refunding for the City this year, having saved just over one million dollars with the issue they completed earlier in May of 2019.
“This is excellent news for the taxpayers of the City of Meriden,” said City Manager Timothy Coon. “By refinancing these bonds, we were able to take advantage of the low interest rate environment. The result is significant budgetary savings for our citizens.”
The City’s Chief Financial Officer Kevin McNabola indicated that as a result of the refinancing, the City will lower its interest costs by over $1.67 million, the majority being realized in fiscal year 2021. A substantial amount of the savings is also being allocated to the fiscal year 2022 budget year. The bonds will refinance bonds originally issued in 2013 that have reached their “call date”, or the date at which the City can refinance those bonds on a tax-exempt basis. The proceeds of those issues were originally used to fund various school, sewer and public improvement projects.
The interest rates bid on the bonds ranged from a winning bid of 1.08% to a high bid of 1.46%. It was a strong bid by Morgan Stanley since they beat out the second place by nearly 0.06% (or 6 basis points). Five firms submitted bids with Morgan Stanley edging out firms like Piper Sandler and JP Morgan, among others.
“The municipal market has really stabilized, and we have experienced an unprecedented period of low rates since the Spring,” said Matthew Spoerndle, senior managing director of Phoenix Advisors and Meriden’s municipal advisor. “The City was able to take advantage of the low rate environment and save nearly $2.8 million over the two refinancing’s this year. This is great news for the City!”
S&P Global ratings affirmed Meriden’s rating at AA, which is two notches away from the most coveted AAA rating that the likes of Fairfield, Westport and Ridgefield possess. Within the report, S&P referenced the City’s “strong management, with good financial policies and practices” while also noting “very strong liquidity” as credit strengths. It also noted some challenges going forward with respect to economic growth, budgetary flexibility and long term liabilities like overall pension funding as areas of potential concern. Primarily as a result of the COVID-19 pandemic and the potential for significant financial and economic challenges facing many local governments nationwide, S&P also affirmed the “negative outlook” the City received earlier in the year. The report noted their “assessment incorporates heightened near-term uncertainty that exists due to the recessionary pressures related to the COVID-19 pandemic and resulting financial pressures.” The outlook change does not necessarily foreshadow a rating change, but rather notes that they are aware of the challenges that exist which could lead to a rating action in the near term. The report notes that “outlook revision reflects a one-in-three chance the rating could be lowered as a result heightened near-to medium-term budgetary uncertainty due to the COVID-19 pandemic.”